Europe must act now to compete on shale gas - Austria's OMV

11 March 2013 16:53[Source: ICIS news]

LONDON (ICIS)--Europe's petrochemical industry is at risk of being undermined by the shale gas boom in the US and the European Union's failure to adopt a common policy to cover the exploitation of shale gas in member states, Austria's OMV said on Monday.

OMV's CEO Gerhard Roiss has set out to make it clear to EU officials that Europe could be threatened by “deindustrialisation” if it did not quickly to deal with the impact of the US's shale gas success, which has given its industries access to cheap gas, by adopting a much stronger position on shale gas, the company's press office said.

OMV, an oil, gas and petrochemicals group, said, for instance, that a petrochemical renaissance is underway in the US thanks to the cheap feedstock now available from shale gas production.

“Today, we see the US is profiting from decisions it took [on shale gas] policy some 10 years ago,” OMV said.

“Europe has to act as soon as possible,” it added.

OMV, as a European energy company that is an international player, has “an obligation to move things forward [and] we are in constant dialogue with EU representatives and other political stakeholders”, the company said.

So far this year, analysts have regularly mentioned how Europe's petrochemical producers, which base their production on oil-sourced naphtha feedstock, face a growing threat of cheap exports from American petrochemical companies that now have access to ethane feedstock derived from shale gas production.

In mid-February, for instance, Erste Group Bank referred to the worrying scenario when assessing the prospects of Czech petrochemical producer Unipetrol.

The US has exploited massive reserves of previously inaccessible gas by deploying new technology that enables the hydraulic fracturing, or fracking, of shale rock.

However, in Europe, with environmental groups raising concerns about possible environmental dangers they claim could be caused by fracking, some countries, such as France and Bulgaria, have announced a shale gas moratorium.

Poland is one EU member state that has been vocal about supporting the exploitation of shale gas.

Last week, the CEO of Polish oil and petrochemical producer PKN Orlen, Jacek Krawiec, said at the IHS CERAWeek energy conference in Houston, that his company recognised that the global energy map has been redrawn by the shale gas revolution in the US.

Orlen's group strategy for the next five years includes a one-billion-euro commitment to unlocking shale gas resources in Poland.

The Polish government says it is fully behind the state-controlled group's enthusiasm for shale gas, arguing that it could help Polish companies reduce their over-reliance on imports of Russian natural gas.